Tuesday, 2 July 2019

Ceisteanna (207)

Michael McGrath

Ceist:

207. Deputy Michael McGrath asked the Minister for Finance the meaning of the phrases "automatic stabilisers" and "temporary, targeted support for the sectors most affected"; and if he will make a statement on the matter. [27951/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The 'twin track' approach proposed in the Summer Economic Statement allows the maximum flexibility in terms of preparing for Budget 2020. It covers the 'orderly' Brexit scenario but alternatively should a 'disorderly' Brexit arise, this would present the baseline for any additional support required.

In terms of the fiscal impact of a no-deal Brexit, it should be noted that the current plans provide for a package totalling €2.8 billion in 2020, of which a quarter remains to be specifically allocated. This represents a substantial starting point.

On top of that, the so-called automatic stabilisers will kick in which will help cushion the economy. The automatic stabilisers refer to the counter-cyclical support that the public finances provide to the economy through social protection payments occasioned by higher unemployment and on the revenue side, lower tax collections which help cushion aggregate demand.

In addition, supports providing temporary targeted funding for the most affected sectors will be deployed as appropriate.

The initial analysis is that the overall impact on the public finances of a disorderly Brexit would be a reduction in the General Government Balance of an illustrative order of €6½ billion.